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CNN Fact Checks: McCain’s mortgage plan impact to taxpayers

Sen. Obama releases a new ad that focuses on Sen. McCain’s plan for the government to buy individual mortgages.

The Statement:

An ad released Thursday, October 9, by Sen. Barack Obama’s campaign, titled “Tested,” takes aim at Sen. John McCain’s mortgage plan. “McCain would shift the burden from lenders to taxpayers, guaranteeing a loss of taxpayer money,” the ad’s narrator says. “Who wins? The same lenders that caused the crisis in the first place.”

The Facts:

The ad refers to a plan McCain announced during a debate Tuesday night in Nashville, Tennessee. “I would order the secretary of the Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes – at the diminished value of those homes – and let people be able to … make those payments and stay in their homes,” McCain said.

On his Web site, McCain calls it “an American Homeownership Resurgence Plan.” Under his plan, the government would buy up some troubled mortgages at their full value – meaning the lenders would not take a loss. The government would then renegotiate those mortgages, so that eligible homeowners would be paying rates based on their homes’ current, reduced value.

Obama, in his ad, highlights this quote from a CNNMoney.com story: “Much of the burden of paying to keep troubled borrowers in their homes will shift to taxpayers.” The McCain campaign acknowledged that point, both on a conference call with Holtz-Eakin on the day after the debate and in a follow-up interview with CNN’s Les Christie, writer of the CNNMoney.com story.

The McCain campaign says the plan would cost about $300 billion. “Funds provided by Congress in (the) recent financial market stabilization bill can be used for this purpose; indeed by stabilizing mortgages it will likely be possible to avoid some purposes previously assumed needed in that bill,” the campaign Web site says.

The Verdict:

True. The McCain campaign acknowledges the plan would shift the burden to taxpayers.

The new campaign ad that Obama released is stating the facts truthfully; we the voters would be saddled with this load and not the lenders. Once again, John McCain is looking out for the lenders and not the “middle class.”